- [The reason for Norway’s interest in the middle east has to do with the economics of oil. Saudi Arabia is Norway’s no. #1 competitor in the international oil market of the 21st century. For Oslo to gain a foothood in the middle east would mean a great deal for the Norwegian economy and a boon for Norwegian intelligence.]
Production of oil in the Norwegian sector of the North Sea began on the Ekofisk field in 1971. Now, on the threshold of a new century, Norway holds the position of the world’s second largest exporter of oil after Saudi Arabia and is expected to maintain this high level of production for several years to come. After all, the country has only reached the halfway point of its so-called Oil Age.
It is not without a certain amount of excitement about industry and energy strategy that Norway is entering what has been dubbed the Gas Century: natural gas is becoming an increasingly sought-after and eco-acceptable energy commodity. Norwegian exports of gas to countries in Europe will nearly triple from now until 2005, in competition with gas from Russia and Algeria and other countries. Norwegian gas exports to Europe nevertheless have a 90-year perspective.
Norway’s position as the second largest exporter of oil may seem remarkable when you consider how much of the world’s oil is found on the Norwegian continental shelf: Only one per cent of the world’s reserves are located in Norwegian territory. Why Norway ranks so high is because it exports a total of 90 per cent of its oil production.
The situation for gas is a little different: Norway has three per cent of the world’s gas reserves and by 2005 will be one of the five largest producers of gas in the world.
In a European context, however, Norway’s position as an oil and gas nation is substantially greater, in that Norway sits on approximately half of all remaining petroleum resources in Europe.
The Norwegian continental shelf is four times as large as mainland Norway and accounts for one-third of Europe’s continental shelf.
The development of the Norwegian continental shelf has taken place by leaps and bounds: today it takes only three days to produce as much oil as was produced in all of 1971 – the first year of oil production from the Norwegian sector of the North Sea. Norway’s Oil Age is commonly referred to as the “oil adventure”.
A long Norwegian maritime industry tradition, featuring some of the world’s largest fisheries and shipping fleets operated from Norway, has been extended with the most modern technology needed to utilize the ocean’s resources today.
The numbers speak for themselves: In 1998 oil and gas made up one-third of Norway’s total exports, over 40 per cent of total investments, 12 per cent of all value creation in the country and 13 per cent of the gross domestic product.
There can be no doubt that Norway lives in a so-called petroleum economy, with all of the advantages and disadvantages this entails, e.g. fluctuating oil prices.
More than 90,000 people work in the oil industry today. Around 20,000 are shift workers on the oil and gas platforms in the North and Norwegian Seas, Norway’s two main oil and gas-producing areas.
Government petroleum fund for the future
The Norwegian government is an active participant in and co-owner of Norwegian petroleum operations, both through the state-owned oil company Statoil and the government’s direct financial involvement. Norway currently enjoys huge revenues from oil, but in order to meet economic challenges after its oil runs out, part of the state oil revenues are set aside in a so-called petroleum fund.
In other words, Norway’s petroleum wealth is being converted into financial assets in order to safeguard the future of the Norwegian welfare state.
Despite intense exploration, no discoveries have made and developed at this time in the third main area-the Barents Sea in the Arctic part of Norway.
Plans to develop the so-called Snøhvit field on the Tromsø field are in hand and can be realized in a few years. Snøhvit would then become the first fixed point in the so-called northern areas, where substantial gas reserves have been found on the Russian side of the Barents Sea.
Cooperation in the petroleum sector is one of two subjects currently being discussed by Norway and Russia in connection with the negotiations over the sector line in the Barents Sea.
As big as Texas
Norway has been looking for oil and gas in the north since 1980 but has yet to find appreciable deposits. Despite the disappointments, oil companies in Norway will continue to explore the Far North, with its vast potential. The net exploration area in the Barents Sea makes up two-thirds of the Norwegian continental shelf and is equal in size to Texas.
The Norwegian Petroleum Directorate calculates that 27 per cent of the undiscovered petroleum resources on the Norwegian continental shelf are located in the Barents Sea, which must be regarded as the frontier region of the Norwegian continental shelf compared with the North and Norwegian Seas.
North Sea biggest
The North Sea will for many years nevertheless remain the hub of the Norwegian petroleum industry while the development of the Norwegian Sea continues. The Ekofisk, Frigg, Oseberg and Snorre fields in the North Sea are some of the most expensive and technically complicated industrial projects in the world. All have been financed via large joint ventures involving the world’s largest oil companies.
From 1971 to 1996 a total of NOK 1,500 billion was invested in exploration, construction and operations on the Norwegian continental shelf. This is equivalent to what it takes to run the entire country for three years at the 1999 level.
Similar investments are expected from now until 2025 provided the price of oil stays at a “reasonable level” by Norwegian standards.
Started in Groningen
The discovery of an enormous gas field on land in the Dutch province of Groningen in 1959 prompted the world’s largest oil companies to prospect for oil and gas in the North Sea: Geologists believed that the same geology had to stretch out into the North Sea.
Western Europe was already then a growing oil market-and now gas from Groningen would create the foundation for a gas market in Western Europe too. Already one of the world’s largest, it is destined to grow even bigger in the next century.
Still oil and gas
Calculations indicate that fossil fuels, particularly oil and gas, will dominate the world’s energy markets for 40 to 80 years into the next century.
It is precisely during this period that Norway will produce most of its remaining oil and gas deposits. Fresh resource estimates from the Norwegian Petroleum Directorate show that only one-third of the oil-and only nine per cent of the gas-believed to exist on the Norwegian continental shelf has been produced so far.
On the waiting list
The bulk of future production will for many years continue to come from the 56 oil and gas fields already in production in the North and Norwegian Seas.
In addition, 136 small and medium-sized discoveries are waiting to be developed. Thirty of them will be developed over the next 10 years and a further 50 in the subsequent decade, according to fresh estimates from the Norwegian Petroleum Directorate.
From the very start in 1966-when the world’s oil explorers arrived in Norway-the North Sea was described as the “world’s harshest exploration area for oil and gas”.
The development of Norway’s oil riches involved considerable trial and error before the exploration platforms and production facilities were adapted to the North Sea’s challenging environmental conditions.
Taller than the Empire State Building
While equipment and know-how in the beginning had to come from the outside, Norway gradually built up both competencies and technologies adapted to the special conditions of the Norwegian continental shelf.
The linchpin in this process is the Condeep platforms, the gargantuan steel and concrete production platforms which, if placed beside the world’s largest and best-known buildings, would tower above the Eiffel Tower in Paris or the Empire State Building in New York.
Norwegian concrete technology has also been employed in the world’s first Arctic offshore oil development-the Hibernia field outside Newfoundland.
Consequently, the North Sea quickly acquired a reputation as a laboratory for developing offshore oil and gas technology. There is only one difference between large land-based projects and today’s offshore technology: the installations are hidden from people by the sea. Only those working out on the platforms can experience how far the boundaries of technology have been stretched to pump oil and gas from the depths of the ocean.
A universe beneath the sea
Fantastic development has taken place within what can be called quieter technology, e.g. seismic surveying and greater precision in and remote control of drilling operations. Seismology is a type of ultrasound technique that makes it possible to peer into the bottom of the ocean where oil and gas may have been formed hundreds of millions of years ago, thousands of metres underneath the seabed.
The knowledge amassed today about the ocean is so great that people talk today about a “universe beneath the sea” in which not least petroleum activities have brought about great progress, including on the Northeast Atlantic continental shelf where Norway has extensive petroleum operations.
Another invisible technical experiment that has succeeded 100 per cent in Norway is enhanced recovery. When oil production started on Ekofisk in 1971, it was thought that only 17 per cent of the oil deposits present in the ground could be recovered. Norway was unwilling to accept this and decided to challenge nature’s own processes.
Thanks to the injection of water, gas, chemicals and horizontal drilling, oil recovery on the Norwegian continental shelf currently averages 44 per cent; the goal is 50 per cent and perhaps more if technological development continues at its present pace over the next 10 years.
Enhanced recovery allows Norway to earn several hundred billion extra kroner and has taken on greater importance other places in the world, including Canada and the U.S.
Akin to space travel
The future challenge on the Norwegian continental shelf lies in developing new more simple technology, even better drilling methods and seismic technology, deepwater development, and having a major portion of operations run by remote control on the seabed or down in the production wells. From a technical and economic point of view, this is just as challenging and demanding as space travel.
Norway’s Oil Age began at a depth of 70 metres in the southern part of the North Sea-and even the biggest and best companies with experience from all over the world took a hammering from the North Sea in those initial years, whether the depth was 70 or 100 metres.
Today the Norwegian oil industry has experience in drilling at depths of 1,200-1,300 metres in the Norwegian Sea and drilling is done to a depth of 5,900 metres at a distance of up to nine kilometres from the mother platform.
The whole operation is controlled and operated from fixed or floating platforms on the surface of the ocean. A steadily increasing number of production systems are being installed on the seabed and operated by remote control using space technology principles.
Preparations are currently underway to develop the huge Ormen Lange gas field in the Norwegian Sea, at a depth of 1,100 meters. Yet another epoch awaits: deep water, as in rest of the world. This is the future facing a country which for centuries has used the sea as an economic resource in building up its prosperity through fishing and shipping.
The oil and gas epoch has already expanded and pushed all Norwegian maritime skills and knowledge forward-with more to come.
The sea rules
The preface to a major work about Norway states: “If people are to live on the coast, they have to come to terms with the ocean.”
Norway and Norwegians have been doing this for centuries. The oil and gas age is nevertheless a distinct epoch, whose scope may perhaps take another 100 years to fully comprehend.
A major element in the development of the Norwegian offshore oil industry has been safety: the safety of workers and the safeguarding of the environment, assets and regular production. Sprinkled like islands throughout Norwegian ocean areas, which are also a gigantic larder, are rows and clusters of oil and gas platforms that are in essence highly productive floating factories manned by thousands of oil workers from all over Norway.
Like the Vikings, mariners and fishermen before them, Norwegians have learned to relate to the sea in a new way. Oil and gas have set new parameters for Norway, and the country has risen to the challenge.
January Hagland is Director of Information for the Norwegian Petroleum Directorate.